It was almost too good to be true. In June 2009, the Mummers, a loose amalgam of instrumentalists fronted by singer Raissa Khan-Panni, her collaborator Paul Sandrone and Sussex-based arranger Mark Horwood, were having the lavishness of their album, Tale to Tell, matched with some equally extravagant praise.

This was, reviewers decided, the sort of music – all playful brass parps and gorgeous string glissandos – that really only belongs in the dreams of children. Khan-Panni approached every song with suitably childlike wonder, while Horwood's opulent orchestrations were as far-out as any psychedelic rock you care to mention.

And then, one night in September 2009, in the treehouse studio deep in the Sussex countryside where they had recorded their marvellous music, a place that Khan-Panni had described as "magical", reality intruded, when Horwood killed himself.

It was, recalls the 34-year-old singer today, the worst moment of her life. No one had really seen it coming, she says, talking in a cafe near her home in south London. "He suffered from very bad depression which used to strike at nights, and we knew he had these bouts, but we didn't know how bad they were." It wasn't as though Tale to Tell was a Joy Divisionesque affair bearing portents and clues left by Horwood, Ian Curtis-style. "No," she agrees, "but looking back you find things …" Listening to the album with the benefit of hindsight, she divines amid the jaunty calliopes and fluttering flutes a certain "darkness" and a commitment to detailed picture-painting that points towards a character who perhaps experienced things too intensely. She remembers returning from the road that summer and feeling the dramatic change of pace, the comedown, herself.

"It had been an amazing tour, we'd been all over Europe, and we'd really come together as a band," she says. "Then, when we came back – well, when you come off tour, you get depressed because you want to be back there." That, she thinks, might have had something to do with the tragic events of Monday 14 September 2009. But, she says, "I don't think Mark will have 100% known what he was doing."

Horwood was a heavy drinker, prone to dramatic mood swings. "He was a very quirky person," Khan-Panni says, "who, if he did something, you'd just think: 'Oh, it's just Mark.' He was irregular. It wasn't so much what he did but the way he was – not conventional. He'd do random things like laugh hysterically at something out of the blue. Then, the next day, he'd be very withdrawn. One night it all got too much and he did it."

In a way, the Mummers were born out of depression – Khan-Panni's. The daughter of an English mother and a father of mixed Chinese, Indian, Mexican and Russian ancestry, she grew up in middle-class south London. After getting a degree in avant-garde classical composition from Bristol University, she signed to Polydor in her early 20s, only to get dropped when her three albums of indie guitar pop, issued under the name Raissa, were not a commercial success.

With two young children to support, she was found work as a waitress, and began to hate her mundane life. "I had kids to look after, I was in loads of debt – the Mummers were an antidote to this totally miserable existence, a way of cheering myself up," she says.

After Horwood's death, she once again sought solace in the fantastical soundscapes of the Mummers. The latest EP, Mink Hollow Road, includes music she and Horwood had worked on together during summer 2009, as well as brand new pieces that have helped her come to terms with his suicide. The EP could easily have been an exercise in catharsis involving a lot of screeching and noise.

"After Mark died, I started writing lots of personal, direct lyrics, and I was tempted to go in that really personal direction," she says. "The music could have turned out edgy and dark." Instead, she wrote songs that were, if anything, even more ornate and escapist than before. "I just thought … 'No, this isn't me, it's too self-indulgent, that's not the Mummers.' And also, I felt that that would in some way be capitalising on what happened. So I went the other way and began almost romanticising how things should have worked out. I wanted to make it better."

Khan-Panni is mistrustful of the notion that angular and discordant sounds somehow represent more authentically an angst-ridden mind, as though somehow Harold Arlen and EY Harburg, the composers of Over the Rainbow – a piece of music Khan-Panni grew up loving – were somehow incapable of understanding extremes of negative emotion. Rather, she believes beautiful, symphonic music that is easy on the ear can speak just as forcefully about pain and despair: "You don't have to say 'I am sad' in a song to communicate that you're feeling sad. You can do it in subtle ways."

Khan-Panni is still coming to terms with Horwood's suicide. And she is currently working for "minimum wage" in a restaurant rather than doing session singing, because she is repelled by the idea of making music just to make money.

It makes perfect sense, then, as in her theory proposed above, that the Mummers' latest music should be more uncannily lovely than ever. The title of Mink Hollow Road is a play on the title of Todd Rundgren's 1978 album, The Hermit of Mink Hollow, used because Khan-Panni is drawn to the idea of music's cocooning effect. There is a cover on the EP of Rundgren's song Fade Away that is multilayered bliss.

Meanwhile, the opening song, Call Me a Rainbow, is her attempt to, as she puts it, "out-Judy Garland Judy Garland". Then there's Cherry Heart, an original tune that sounds as though it came from the same composers as Björk's It's Oh So Quiet. As Doris Day cute as it is David Lynch weird, it has has found a strangely ideal home, as the theme song to a forthcoming sci-fi series, Slinger. Khan-Panni believes Horwood would have been proud.

"Mark's dying was terrible for a long time, but I feel as though we're honouring his spirit completely with these new recordings," she says. "I do feel like he's there with us, and he guides us – he could have written the stuff we're coming out with now."

She looks sad. "The ghost of Mark will always be there." At no point, however, did she consider giving up. "The Mummers are an adventure, with all sorts of ups and downs and twists and turns. We're a dysfunctional, disparate family, and normal things don't happen to us," she exclaims. Suddenly, her face brightens. "But that just makes us want to carry on and see what happens."